Sustainable Economic Development Plan 2012/13 - St Helena

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Sustainable Economic Development Plan P a g e | 13 Section 5: The Wider Economy Fishing, Agriculture and General Economy Whilst tourism will be the largest element in the economy, it will not be the only activity. As tourism grows, it will provide the financial driver to grow the whole economy, including those elements not directly linked to tourism. Visitors want to visit interesting destinations which for Saint Helena are mainly historical, environmental and contemporary elements. Parts of the contemporary mix are: Fishing – important as a source of employment and foreign earnings. Currently only waters within approximately 12-15 miles of Saint Helena are fished. Therefore, less than 1% of the 446,500km 2 Saint Helena Exclusive Economic Zone (EEZ) is currently legally fished. Seeking to exploit the fishery further, particularly the offshore waters, is a key priority. Also sport fishing may be a significant part of the tourism offering. The SEDP will support fisheries development on Saint Helena through greater levels of financing and additional human resource. The first priority will be to gauge the potential of the market. The second priority will then be to ensure the market is fully utilised. Agriculture & small holding – these will be an important element in providing food and products for both locals and visitors. Local produce will also support the ‘green location’ branding of the island, in that the ‘carbon miles’ associated with food products will be minimal. It is however recognised that there will often continue to be a requirement to import food and food products. It is important for Saint Helena to concentrate on local products that: o have a sustainable advantage (e.g. price, availability). o are attractive for visitors who may be happy to pay a premium for good quality locally produced foods. Coffee – an increasingly important foreign currency earner as well as a product of interest. Distilling – an interesting product for both Saints and visitors. The supporting service sectors are a substantial part of any economy and these will expand as the overall economy grows, driven by external earnings from tourism and fishing. Segments that will grow will include: construction, wholesaling, retailing, hospitality, transport, tours and excursions, professional services, telecoms, laundry, web design, crafts, maintenance, car hire and insurance. As well as established businesses getting larger there will also be small and medium sized business creation. These new businesses, by activity and size, are ideal for Saints to start and run. It is essential that Saints, on-island and off-island, have the encouragement, business advice and access to finance to exploit these opportunities. Business is about risk and it is essential that Saints are able to operate in a new and more dynamic and less predictable business environment. Cannot do everything- need to prioritise and allocate resources With +4,000 people and full employment, there is currently little spare capacity within the economy. 500-700 new jobs have been identified over the 10 years of the SEDP, so this lack of capacity is unlikely to change and may get worse. This shortage in capacity is planned to be addressed by: 1. SHG reducing its headcount. This will make staff available to the private sector. 2. Both SHG and the private sector becoming more productive, through improved systems, equipment and working practices. 3. External resources. TC staff, immigrant labour, off-shore investors arriving to start businesses, etc. With too many potentially beneficial initiatives and limited resources, it is important to recognise that not everything can be done. It is relatively easy to identify tasks but it is much harder to find the people and resources, financial and other, to implement them. Therefore, it is essential to prioritise resources to where they will have the biggest overall effect. Saint Helena a tourism driven economy: Small Footprint, Huge Step Forward
Sustainable Economic Development Plan P a g e | 14 Section 6: Creating an Enterprise Economy Rebalancing from a Centrally Planned Economy to an Enterprise Economy Saint Helena’s dependence on UK budget support and consequential dominance by SHG has created an exceptional economy, structured to effectively deliver this support. The island’s situation over time has become institutionalised. With very limited business opportunities it has had to be more characteristic of a centrally planned economy than a dynamic free market economy. With the economy opening up, there needs a fundamental rebalancing of the economy. This requires a change in public and private sector structures, cultures and mindsets. The first reaction can be to find reasons not to do things rather than reasons to do things. Changing institutional culture and mindsets is notoriously difficult in any organisation, in any situation. To ensure that the economy grows and becomes self-sustaining, there needs to be changes to parts of both the private and public sectors culture and thinking. Public Sector Governments in small communities inevitably take on ever growing ranges of services but often have difficulty in divesting or stopping providing services – even if they have committed to do so. SHG has policies to divest services and reduce its footprint. These policies have to be translated in to practical actions. An important principle in this will be, where possible, that ‘the user of a service pays for its provision’. Without this, the taxpayer is bearing the cost, not the user of the service. There is also no income stream to pay for a private sector operator to provide the service. Across SHG senior officials thinking should include: “How can we change to provide services more efficiently?”, “How can the private sector provide the service?”, “How can SHG help the private sector?” The benefit to Saint Helena and SHG adopting this thinking will be less cost, higher tax revenues and a sustainable economy, with SHG in charge of its own financial situation. The stakeholders and the whole community must move away from often regarding SHG as ‘the only provider of services or solutions’ to issues. Increasingly the private sector should be given the space to step into; in turn the private sector has to deliver. Private Sector Saints, living on a remote island, are resourceful individuals. Some individuals are very enterprising as demonstrated by the willingness of some to start catering and retail businesses in what is a small and possibly over-supplied local market place. Often services are provided or have to be supplied at prices that do not enable adequate investment. In some parts of the private sector, there is a reluctance to take on personal risk to move an idea forward – it is felt that it is for SHG to underwrite and take the risk. Taking risk, with potential personal losses, is a basic characteristic of business. The private sector cannot expect SHG to divest services, while SHG retains the risks and pays extra for the provision of the services. The Enterprise Economy The private sector needs to grow hugely to provide St Helena with the financially independent future it wants. Without this dynamic private sector growth, St Helena will not have the future it wants. This will require existing and new businesses, owned by both Saints and inward investors, to invest and grow their capabilities and capacities. The increased relevance and importance of the private sector needs the active support of all stakeholders. Entrepreneurs and private enterprise need to be celebrated, calculated risk taking encouraged, adequate margins and profits recognised as essential and failure seen as a feature of ambition. Saint Helena a tourism driven economy: Small Footprint, Huge Step Forward
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Sustainable Economic Development Plan 2012/13 - St Helena

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